Most personal auto insurance policies in Colorado cover vehicles used by employees for general business purposes, but it is a good idea to verify your coverage with your carrier.

Many employees are required to use their personal vehicles for work purposes. Under a legal theory known as respondeat superior, employers are responsible for the negligent acts of their employees if those acts are committed while they are in the course and scope of their employment.

So what happens if an employee gets into an auto accident in Colorado while using his personal vehicle on company time?

Personal Auto Insurance

Most personal auto insurance policies will provide coverage for vehicles used by employees for business purposes, except those who use their vehicle for “livery” purposes– carrying goods or people for a fee, meaning delivery drivers (pizza, flowers, and laundry, for example) who don’t usually have coverage. However, in most instances, the general business use of a vehicle (calling on customers and getting supplies) does not present a coverage issue in the event of an accident occurring on company time.

Business Auto Insurance

Generally, a business auto policy won’t provide coverage for employees who are sued, even if the accident happened during work hours, since the purpose of a business vehicle policy is to protect the employer, not the employee. Most business car insurance won’t cover damage to an employee’s car, although insurers will sometimes add a standard endorsement stating “employees as additional insured” for a small extra premium.

However, it is important to know that any accident caused by an employee while driving his own car will be paid first by the employee’s personal auto insurance. If there isn’t enough coverage under that policy, the employer’s business auto policy will generally pick up the rest, as long as the employer’s policy includes an “employees as additional insured” endorsement.

Many employers address this insurance coverage issue with their employees in one of three ways:

  • Providing a company car for business errands.
  • Offering to pay the deductible for any accident that damages an employee’s personal vehicle.
  • Paying employees larger mileage rates to compensate them for the risk.

Whatever option they choose, employers should provide a thorough explanation to all employees about their policies regarding using personal vehicles for company business.

Running Errands During Commutes

Under what is known as the going and coming rule, an employee is not thought to be within the course and scope of his employment while traveling to and from work, but if an employee, while making his commute, is on a “special errand” for his employer, then he is considered within the scope of employment, at least from the time he starts the errand until he finishes it. So, if he negligently injures someone while completing the errand, his employer’s insurance would likely provide coverage.

Full Disclosure Always Recommended

It is a good idea for employees to verify their coverage with their own insurance carriers regarding coverage while they are in the scope of employment. Full disclosure of business use will typically prevent any coverage problems before they happen, and many insurance companies won’t raise premiums for occasional business use. But salespeople who use their cars primarily for business purposes may incur higher premiums.

If you use your personal car for company business in Colorado, your driving record is probably going to be relevant for your employer, and many employers routinely check employees’ motor vehicle records. If an employee causes an accident while in the course and scope of his employment, he could expose his employer to a lawsuit, a situation nobody wants be in.

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